Page 171 - Washington Nonprofit Handbook 2018 Edition

d. Quid Pro Quo Contribution Requirement for Donee Organizations

The recipient of a quid pro quo contribution in excess of $75 must provide a

written statement to the donor in connection with the solicitation or receipt of the
contribution. See Code section 6115(a). The term “quid pro quo contribution”
generally includes any payment made partly as a contribution and partly in
consideration for goods or services provided to the donor by the donee
organization. See Code section 6115(b). However, a contribution to a religious
organization is not quid pro quo if the donor receives solely an intangible religious
benefit that generally is not sold in a commercial transaction outside the donative
context. Also, no statement is required for a gift to the federal government or a
state or local government if the gift is exclusively for public purposes. See Code
section 6115(a). Moreover, transactions that have no donative element (e.g., sales
of goods by a museum gift shop that are not, in part, donations) are not quid pro
quo contributions. See H.R. Rep. 213, 103d Cong., 1st Sess. 566. The $75 threshold
is applied separately to each contribution. See id. at n.36.

The statement required must inform the donor that the federal income tax
deduction for the contribution is limited to the amount of the contribution (the sum
of the money and the fair market value of any contributed property), less the value
of the goods or services provided by the organization. See Code section 6115(a)(1).
The organization must also provide a good faith estimate of the value of such
goods or services. See Code section 6115(a)(2).

The organization may estimate fair market value by any reasonable method,
so long as the method is applied in good faith. See Treas. Reg. section 1.6115-
1(a)(1). If the goods or services are not generally available in a commercial
transaction, their value may be estimated by reference to the fair market value of

similar or comparable goods or services, even if those goods or services do not
have the unique qualities of the goods or services that are being valued. See Treas.
Reg. section 1.6115-1(a)(2).

Various goods and services, including many items of smaller value and most
benefits allowed to members who pay annual membership contributions of $75 or
less, may be disregarded in determining whether a contribution is quid pro quo
and, if so, in valuing goods or services. See Treas. Reg. section 1.6115-1(b). These
items are also disregarded if they are provided to employees or partners of a
corporate or partnership donor. See Treas. Reg. section 1.6115-1(d)(1).

WASHINGTON NONPROFIT HANDBOOK -160- 2018